Generic competition is the backbone of affordable healthcare—turns the DA

The cost of prescription drugs in the U.S. continues to be a source of concern for patients, caregivers, and policymakers. In a recent poll of U.S. adults, 77% of respondents with varying political affiliations said that prescription drug costs were “unreasonable” (1). In 2016, the U.S. spent $450 billion on prescription medicines, accounting for 14% of total health care spending and projected to increase to $610 billion by 2021 (2). Much of this increase in drug spending is due to brand-name drugs that are protected from generic competition by patents and regulatory exclusivity (3). Though they constitute only 10% of prescriptions dispensed in the U.S., brand-name drugs account for 74% of drug spending (4). During the market exclusivity period, the brand-name manufacturer can earn sizable profits, which can help to drive further pharmaceutical innovation and investment in drug development.

In the U.S., drug prices typically decline rapidly once generic drugs receive U.S. Food and Drug Administration (FDA) approval and begin to enter the market. The greater the number of generic manufacturers’ versions in a market, the steeper the price decline, with prices decreasing to less than 20% of the original drug’s price (5, 6). In 2016, generic drugs accounted for only 27% of overall U.S. drug spending yet constituted 89% of drug prescriptions in the U.S. (7), a dramatic increase from just 19% of prescriptions in 1984 (8). Low-cost generic drugs generated $253 billion in savings to the U.S. health care system in 2017 and more than $1 trillion in the past decade (4, 9). Appropriate use of low-cost generic drugs is associated with improved patient medication adherence (10, 11) and health outcomes (12).

In the past decade, however, there has been growing concern about the rapid rise in costs and shortages of generic drugs, despite their substantially lower prices when compared to brand-name drugs. A recent U.S. Government Accountability Office report found that 315 of 1,441 (22%) generic drugs sold in the U.S. experienced price increases of 100% or more from 2010 to 2015, many of which were older, small-market medicines (13). Shortages of generic drugs in the U.S. have also risen, quadrupling between 2005 and 2011, from 61 to 250 drugs (14, 15). Large price increases of generic drugs have been associated with decreases in physician prescribing and drug utilization (16). Despite no longer being protected by patents and regulatory exclusivity, these older drugs experiencing price increases and shortages often lack robust competition.